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Equity Market

Equity Market: How Does It Work?

The origination of the Indian stock exchange dates back to 1875, with the establishment of the Bombay Stock Exchange. BSE is the oldest stock exchange trading in Asia. More than 5500 companies are listed on BSE and around 1700 companies and more are listed on the National Stock Exchange or the NSE.

Registration with SEBI and the stock exchange

The Indian equity market has the following participants: trader, investor, companies and brokers. All market participants need to be listed on the preferred stock exchange and with the stock exchange regulatory board of our country, SEBI. This is to ensure transparency in the system. If a company is going public for the first time, then the process starts with the company issuing its IPOs in the primary market.

Understanding primary and secondary markets:

These stocks, which have been issued first in the primary market, are allotted to the initial bidders. After the stocks have been listed, these stocks are then made available to traders and investors in the secondary market, which is responsible for the maximum portion of trading activity in the economy.

Stock broker:

Your stock broker acts a facilitator between you and the company you are interested in. the broker connects various investors to the companies in the equity market for trading on equity. Nowadays, the stock brokers also provide online retail platforms to investors for faster and easier trading. So after a stock is made available in the secondary market, you can register yourself with the stock broker to start trading. With the advent of technology in equity trading, the process of matching the buyers and sellers is wrapped up within minutes, unlike before, when it took weeks together!

Demat account:

Since today, maximum portion of trading happens online, an investor is required to open a Demat account to trade in equity shares. As investors also have to be listed on the broker, this happens through the Demat account, where the investor files his / her registration with the investment broker. The Demat account saves all transaction details, transaction history, certificates and likewise, pertaining to the investor!
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